Case Study: American Airlines Action Raise Predatory Pricing Concerns
1. What routes are at issue in the case? Who was the competition in each case? How did American react?
2. When American matches the fares of a low-cost carrier, what competitive advantages does it have over those airlines?
3. What are the barriers to entry for airlines to compete with American on routes from DFW?
4. What is FAUDNC, and how is it used by American Airlines? What other cost/profitability measures are used?
5. How does American’s reputation for challenging low-cost carriers factor into decisions made by competing airlines? Has American’s reputation deterred entry by low-cost carriers on DFW routes?